Issue

There are 1.8 million households on waiting lists for social housing. We must ensure people can get accommodation that meets their needs both in terms of quality and cost.

Actions

The government is improving the quality and quantity of properties for rent, both in the private and social sector. We are:

allowing local flexibility on waiting lists, the types of tenancies and social tenants’ and landlords’ rights and responsibilities

helping social landlords stop tenancy fraud and anti-social behaviour

providing more affordable housing, including through a new model of affordable rent that allows registered housing providers to charge no more than 80% of local market rent

changing the housing revenue account subsidy system to a new, fair, locally controlled system where local authorities are responsible and accountable for their housing services

funding local authorities to refurbish their housing stock

supporting tenants to play a bigger role in managing their accommodation through the tenant empowerment programme

encouraging more investment in the private rented sector through schemes like new loan guarantees and the Build to Rent Fund.

Background

On 21 November 2011, the Prime Minister, Deputy Prime Minister, and Secretary of State for Communities and Local Government published Laying the foundations: a housing strategy for England, which set out the government’s actions to address the housing shortage, boost the economy, create jobs, and give people the opportunity to get on the housing ladder.

Who we’re working with

The Homes and Communities Agency (HCA) is the national housing and regeneration agency for England (other than in London). It was established as an non-departmental government body on 1 December 2008. HCA’s role includes:

working with partners to create homes, economic growth and jobs

providing investment, including the Affordable Homes Programme

economic regulation of housing associations, safeguarding £43 billion of taxpayer investment in the sector and helping to secure more private investment for affordable housing

This was a supporting detail page of the main policy document. This content was withdrawn on 31 March 2015 because the regulatory standards that registered housing providers must meet were superseded.

The Homes and Communities Agency’s (HCA) standards are classified as either economic or consumer. All registered providers must meet our consumer standards, but only private providers (not-for-profit and for-profit providers) need to meet our economic standards.

ensure that social housing continues to be available to current and future tenants

enable landlords to be able to invest in new social housing, assuming other conditions are in place

are open and transparent, to allow tenants and other stakeholders to form views on and influence the services delivered by providers

enable providers to meet the regulatory standards and statutory requirements

deliver value for money improvements to support providers to deliver their social housing objectives

protect the reputation of the sector as a whole

Economic standards

These standards apply to all registered providers except for local authorities. Providers’ boards are responsible for ensuring their organisation meets the economic standards. As regulator we will proactively seek assurance from providers that they are meeting our economic standards, while meeting our duty to minimise interference. There are 3 economic standards:

governance and financial viability standard

value for money standard

rent standard

We assess how well providers are meeting the economic standards by speaking to them, meeting with them, and by collecting financial and statistical data. All registered providers are required to submit various types of assurance to the regulator; including a statistical data return to the NROSH+ website. Registered providers are required to submit annual accounts. The accounting direction for social housing in England from April 2012 sets out specific requirements that registered providers must meet when producing their annual accounts.

We publish an annual sector risk profile. This sets out the main risks to their business that registered providers are facing, to help them take action to manage those risks.

Consumer standards

These standards apply to all registered providers, including local authorities. We set consumer standards so that tenants, landlords and others know what is expected of them. This helps tenants to hold landlords to account. These standards support our approach to regulation set out below.

Providers’ boards and local authority councillors are responsible for making sure their organisation meets our consumer standards. Unlike our economic standards we do not proactively seek assurance that providers are meeting our consumer standards. Instead, the Homes and Communities Agency’s role is limited by law to setting the consumer standards and intervening only where failure to meet the standards has caused, or could have caused, serious harm to tenants. This is known as the serious detriment test.

As regulator the HCA takes a co-regulatory approach. Co-regulation places responsibility for meeting our standards on the landlord. Boards and councillors who govern providers’ service delivery are responsible for ensuring their organisation is meeting our standards, and for being open and accountable in how their organisation meets its social housing objectives. It is for providers to support tenants in shaping and scrutinising service delivery and in holding boards and councillors to account.

The principles of co-regulation are as follows:

boards and councillors who govern providers are responsible and accountable for delivering their organisation’s social housing objectives

providers must meet the regulatory standards.

transparency and accountability is central to co-regulation

tenants should have opportunities to shape service delivery and to hold the responsible boards and councillors to account

providers should demonstrate that they understand the particular needs of their tenants

value for money goes to the heart of how providers ensure they meet their objectives now and in the future

Where we make an important decision that changes our approach to regulation, we record it as a decision instrument.

Regulation of small providers

While our standards apply to registered providers regardless of size, the focus of our activity is on larger, more complex organisations that own and/or manage more than 1,000 homes. As a result, providers that own and/or manage less than 1,000 homes should expect to have less contact with us as regulator. However, our regulation of small providers will always include a review of:

annual accounts audited or reviewed by an independent accountant, if appropriate

Intervention and enforcement

If we have evidence that a provider is failing to comply with our standards then we will take action. The action we take will depend on which of our standards the provider has failed to meet, and the way in which that failure has happened. Our approach to intervention and enforcement is described in detail in chapter 6 of the regulatory framework.

We expect providers to identify problems themselves and take effective action to resolve them. If a provider takes responsibility and we conclude that they are able to respond to any problems, then we will work with them to solve their problems.

If a provider has been unable to solve their own problems (or is unwilling to do so), or if we conclude that urgent action is necessary, we may need to consider the use of our enforcement and general powers. The regulatory framework sets out our powers in full, and the ways and circumstances in which we might use them.

In relation to our economic standards, our powers may range from requiring the provider to sign a voluntary undertaking to resolve any issues, to appointing new members to their board. Should we need to take action with a provider then it is likely that we will have downgraded their governance and/or viability grading in a published regulatory judgement.

In relation to our consumer standards, our powers can only be used if we think that there has been a failure to meet a consumer standard which has caused serious harm or where there are reasonable grounds to suspect that the failure could lead to serious harm if no action is taken.

This is the basis of the serious detriment test and the level at which we will intervene is intended to be significantly higher than in relation to the economic standards.

In reaching our conclusions around serious detriment, we have a duty to consider information received from a number of authorities, representative bodies and individuals, including the housing ombudsman, tenant representative bodies, MPs, local authority councillors, the Health and Safety Executive, and fire and rescue services. Information we receive in this context from these bodies is known as a statutory referral.

Failure to meet one or more of the consumer standards does not lead directly to a serious detriment judgement. Where we conclude that an issue meets the serious detriment test then we will publish a regulatory notice.

We publish an annual consumer regulation review setting out examples of the cases which we have investigated in detail under our four consumer standards. It summarises cases which we have not investigated in such detail, together with the reasons why.

In June 2014 we published an independent report into lessons learnt from the case of Cosmopolitan Housing Group, a registered provider that suffered serious governance and financial viability problems, that summarises our intervention.

As part of the programme, we introduced the affordable rent product. This allows registered housing providers to charge no more than 80% of local market rent (including service charges where applicable) for new affordable homes.

Affordable rent gives housing providers more flexibility on rents and use of assets, while providing accommodation for people who need social housing.

On 9 June 2011 we published an affordable rent impact assessment showing the costs and benefits of providing affordable housing under the new model as part of the Affordable Homes Programme.

At the same time, we published a technical revision to annex B of planning policy statement 3 (PPS3). This makes clear that affordable rent falls within the definition of affordable housing for planning purposes.

The proposed changes do not affect existing social tenants’ rights or rents.

New debt guarantees for affordable housing

The Affordable Housing Guarantee scheme was launched to support the building of new additional affordable homes. The scheme will offer housing associations and other private registered affordable housing providers a government guarantee, on debt they raise to deliver additional newly-built affordable homes. This will help to reduce their borrowing costs, increasing the number of new homes they can afford to provide. The guarantee scheme is complemented in England by grant funding, although the guarantees themselves are UK wide.

The guarantee is designed specifically to attract investment into affordable home ownership from fixed-income investors who want a stable, long-term return on investment without exposure to residential property risk. The government will help protect them from this risk by guaranteeing long-term debt (up to 30 years).

The Chancellor announced as part of the 2013 Budget the doubling of available grant funding to £450 million, supporting the delivery of up to 30,000 affordable homes. Details of grant funding and asset management flexibilities can be found in the Homes and Communities Agency’s programme framework and the Mayor of London’s Housing Covenant.

On 20 June 2013 the government appointed Affordable Housing Finance (AHF) as the delivery partner for the Affordable Housing Guarantee. They will raise debt with a guarantee and lend it on to borrowers in line with the scheme rules. Interested parties should contact AHF in the first instance.

Appendix 4: social housing fraud

This was a supporting detail page of the main policy document.

Recent research by the Audit Commission suggests around 100,000 social homes in England could be unlawfully occupied.

With approximately 1.7 million households on the waiting list for social housing and around another 250,000 social households officially classed as overcrowded, social housing fraud needs to be stopped.

Many social landlords are increasing their efforts to stop fraud in their housing stock. As a result more social homes have been recovered for their proper use.

While this progress is encouraging, the government wants to see more done to stop fraud.

We ran a consultation between January and April 2012 and supported the ‘Prevention of Social Housing Fraud Bill’ that received Royal Assent on 31 January 2013.

new criminal offences of sub-letting, with a maximum sentence of 2 years’ imprisonment and an unlimited fine

power for the courts to give social landlords any profit the tenant has made from sub-letting

More powers for local authorities to investigate social tenancy fraud through better access to data from banks, building societies, telecomms companies and utility companies came into force on 6 April 2014.

Appendix 5: decent homes: refurbishing social housing

The government believes that all social housing should meet a minimum standard of decency. Social housing should:

be free of health and safety hazards

be in a reasonable state of repair

have reasonably modern kitchens, bathrooms and boilers

be reasonably insulated

At the beginning of April 2011, there were 217,000 council houses that were in such a poor state of repair that they didn’t meet this standard. To help local councils with the worst housing, the government provided £1.6 billion to the Decent Homes programme for the period 2011 to 2015. A further £160 million has been allocated for 2015 to 2016.

Outside London this programme is run by the Homes and Communities Agency on the goverment’s behalf and £774 million has been paid to to 31 councils to repair and improve nearly 80,000 homes.

London has £820 million to spend on bringing homes up to a decent standard, and decisions on how to use it are made by the Mayor.

Following changes to the Housing Revenue Account (self-financing) system, local councils should have the resources to keep all their social housing at a decent level.

Appendix 6: anti-social behaviour in housing

This was a supporting detail page of the main policy document.

Anti-social behaviour is one of the most serious abuses of a tenancy, and causes misery for immediate neighbours and serious damage to whole communities.

The Department for Communities and Local Government (DCLG) supports landlords who stop this behaviour.

Baroness Newlove was appointed as the government’s Champion for Active, Safer Communities in October 2010 to raise awareness among local people, businesses and frontline workers about what they can do to make their communities safer. She is based within DCLG and works closely with the ministerial team.

DCLG also works closely with the Home Office on anti-social behaviour. Through the Anti-Social Behaviour, Crime and Policing Act 2014, we are introducing a quicker, mandatory route to eviction where a tenant has already been found guilty by a court for serious housing related anti-social behaviour or crime.

We are also extending landlords powers to seek possession in relation to riot related offences anywhere in the UK, as well as for offences directed against the landlord or their contractors away from the locality of the tenant’s property. The new powers will be available to social and private landlords.

The Act will introduce simpler, more effective powers to address anti-social behaviour and provide better protection for victims and communities, including:

a new civil injunction that agencies can use quickly to protect victims and communities from anti-social individuals

a court order, available on any conviction, to stop the behaviour of the most destructive individuals and address the underlying causes of that behaviour - with criminal sanctions on breach

simpler powers to close premises that are a magnet for trouble

more effective powers to stop anti-social behaviour in public places

stronger powers for landlords to deal swiftly with the most serious anti-social tenants

a new “community trigger”, giving victims and communities the right to demand action where repeated complaints of anti-social behaviour have not been dealt with, or have been ignored by local agencies

These provisions will come into force later this year.

Appendix 7: tenant empowerment programme

This was a supporting detail page of the main policy document.

We’re giving all social housing tenants the power to ensure their landlord provides the services they want. We’re also offering support and advice for tenants interested in taking up the tenant empowerment and participation opportunities available to them.

We’re spending up to £2 million every year between 2011 and 2015 on the tenant empowerment programme, enabling tenants to:

set up tenant panels

take up training and support opportunities

exercise their ‘Right to Manage’ (see below)

take up opportunities to manage local housing services, such as repairs and estate management, through Tenant Cashback and Community Cashback

exercise their ‘Right to Transfer’ (stock transfer)

Following the abolition of the Tenant Services Authority, the Department for Communities and Local Government took responsibility for running the tenant empowerment programme on 1 April 2012.

The Localism Act 2011 also gives tenant panels new powers to solve disputes at a local level. Since 1 April 2013 tenant panels, councillors and MPs (‘designated persons’) have had the opportunity to play a more active role in resolving complaints at the local level.

Tenant training and support opportunities

We’re funding a £1.2 million tenant training and support programme to empower tenants to play a bigger role at the local level and challenge their landlord in different ways on a wide range of housing issues. Contact the Tenant Participation Advisory Service for more information.

We’re also supporting the National Communities Resource Centre at Trafford Hall to provide residential training to tenants on a range of topics such as youth engagement, social media and tenant panels.

Right to Manage

Local council tenants have the right to take over the management of local housing services. The Right to Manage Regulations 2012 set out the procedures for a tenant management organisation to enter into a management agreement with a local housing authority.

We’ve made it easier for tenants to take up their Right to Manage by streamlining the regulations first introduced in 1994. So far, around 220 tenant management organisations have successfully taken responsibility for providing services such as repairs and estate management for 70,000 homes. Revised statutory guidance was published in December 2013.

The Right to Manage grant and assessment processes have also been streamlined. For more information on the process, including copies of the application forms you need to get started, please email: tenantempowerment@communities.gsi.gov.uk.

We’ve published guidance on the full range of community rights opportunities people can exercise. We’ll also be publishing a simple guide on ways tenants can engage in their communities: “tenants leading change”.

Right to Transfer

The Housing (Right to Transfer from a local authority landlord)(England) regulations came into force in December 2013. The regulations give local authority tenants a statutory right to initiate a transfer process and require the local authority to co-operate. Statutory guidance is available.

Community Cashback

Community Cashback encourages tenants to take control of small-scale local services, like cutting the grass or decorating in communal areas. Tenants can reinvest any savings they make from running these services into other community priorities.

Read about the experiences of landlords such as Bromford Group and Home Group who have trialled different Tenant Cashback models.

Appendix 8: Housing Revenue Account reform (self-financing)

This was a supporting detail page of the main policy document.

We have reformed council housing finance.

In April 2012 we ended the Housing Revenue Account subsidy system. This means councils can now keep their rental income and use it to fund their housing stock (called ‘self-financing’).

The powers to introduce self-financing were in the Localism Act 2011. On 1 February 2012 we published the final details of self-financing. This included the one-off payments to or from each council, which we used to adjust their housing debt to reflect the value of their stock.

Councils whose existing housing debt was higher than the value of their stock had some debt paid off by the government. Councils whose debt was lower than the value of their stock borrowed to pay the difference to the government.

These payments were based on a valuation of each council’s stock, using a 30-year discounted cash flow model of income and expenditure. The costs in the model assumed that councils will need to spend on average 15% more on managing and maintaining their stock than was assumed under the subsidy system.

The objectives of this reform are:

to give councils the resources, incentives and flexibility they need to manage their own housing stock for the long term and to improve quality and efficiency

to give tenants the information they need to hold their landlord to account, by creating a clear relationship between the rent a landlord collects and the services they provide

As part of the self-financing settlement the government has imposed a cap on the overall levels of borrowing councils can undertake against their Housing Revenue Account. This is necessary to ensure we manage overall levels of public sector spending to help reduce the national deficit.

The government recognises that some councils may need additional borrowing to help them to achieve their housing ambitions, so has made available an extra £300 million Housing Revenue Account borrowing over 2015 to 2016 and 2016 to 2017. This borrowing will support up to 10,000 new affordable homes. See further details about the Housing Revenue Account borrowing programme.

Appendix 9: private rented sector

This was a supporting detail page of the main policy document.

The private rented sector has grown and improved enormously in recent years and accounts for approximately 16.5% of all households, or nearly 3.8 million homes in England.

The private rented sector offers a flexible form of tenure and meets a wide range of housing needs. It contributes to greater labour market mobility and is increasingly the tenure of choice for young people.

The government wants to see a bigger and better private rented sector and believes that the most effective way to make rents more affordable is to increase the supply of new homes.

We are investing £1 billion in a Build To Rent Fund, which will provide equity finance for purpose-built private rented housing, alongside a £10 billion debt guarantee scheme to support the provision of these new homes; and up to 30,000 additional affordable homes.

In October 2013, we published our response to a recent select committee report on the private rented sector. Our response sets out an ambitious package of proposals to ensure all private tenants get proper protection from their landlords. This will include:

In addition, a new model tenancy agreement is being developed, which will provide tenants with a clear guide to rental contracts. This will enable tenants to identify which clauses in their agreement are optional or unique to that property, helping them to negotiate longer fixed-term tenancies and demand greater certainty over future rent rises.

We are also supporting consumers by requiring all letting and property management agents to become members of an approved redress scheme - so consumers can complain and seek compensation if agents’ fees are not transparent. Legislation will be in place by October 2014.

In the few areas where there is bad practice, £4.1 million has been allocated to 23 local authorities to tackle rogue landlords, in addition to the £2.6 million the government has pledged to crack down on ‘beds in sheds’.

£10 billion housing debt guarantees for private rented housing

The private rented sector housing guarantee scheme supports the building of new homes for the private rented sector across the UK, offering housing providers a government guarantee on debt they raise to invest in new privately rented homes. This will help to reduce their borrowing costs, increasing the number of homes they can afford to provide.

The debt guarantee is designed specifically to attract investment into the private rented sector from fixed-income investors who want a stable, long-term return on investment without exposure to residential property risk. The scheme rules for the private rented sector housing guarantee scheme were published in February 2013.

The government is open for direct discussions with interested parties that are eligible in line with the published scheme rules and can raise their own debt finance. We will be looking for applications that comply with the scheme rules and can demonstrate:

The government has recently issued an invitation to tender inviting applications from the market from organisations capable of sourcing funding and on-lending it to borrowers in line with the scheme rules. Further detail about this opportunity is available by registering on the procurement portal.

Private Rented Sector Taskforce

The expert Private Rented Sector Taskforce has been established by the government to improve quality and offer a wider choice to tenants living in privately-rented accommodation across the country.

The taskforce brings together developers, housing management bodies and institutional investors to help them provide more housing for private rent and to increase the size of the sector.

The taskforce is headed by Andrew Stanford. Andrew is the Managing Director and founder of Stanford Mallinson, a property and asset management company, and was formerly Head of Cluttons Residential.

Taskforce members that took up post in April 2013 are:

Julian D’Arcy of Kirkby Capital, a former regional chairman and proprietary partner at Knight Frank

Joanna Embling, a property consultant and chartered surveyor, specialising in urban redevelopment and a former equity partner at Cushman Wakefield

Dominic Martin, senior analyst at EC Harris and a qualified surveyor

Appendix 10: a guide to regulation of registered providers

This was a supporting detail page of the main policy document.

The regulator’s role

The objectives of the social housing regulator are set out in the Housing and Regeneration Act 2008. In summary, we interpret our role as regulating registered providers of social housing in England to:

protect social housing assets

ensure providers are financially viable and properly governed

maintain confidence of lenders to invest into the sector

encourage and support supply of social housing

ensure tenants are protected and have opportunities to be involved in the management of their housing

ensure value for money in service delivery

We must perform our functions in a way that minimises interference and is proportionate, consistent, transparent and accountable. We must also operate within the provisions of the government’s Regulators’ Code.

The terms social housing and registered provider are defined in the 2008 Act. Social housing includes low cost rental (such as affordable rent properties) and low cost home ownership. Registered providers include local authority landlords and private registered providers (such as not-for-profit housing associations and for-profit organisations).

Regulatory framework

The regulatory framework for social housing in England from the 1st April 2015 is made up of:

codes of practice – a code of practice can amplify any economic standard to assist registered providers in understanding how compliance might be achieved

regulatory guidance – this provides further explanatory information on the regulatory requirements and includes how the regulator will carry out its role of regulating the requirements

Regulatory standards

Our regulatory standards for social housing in England are at the core of our regulatory framework requirements. Each standard sets out required outcomes and specific expectations of registered providers. Where relevant, they reflect the Secretary of State’s directions on specific regulatory standards.

Our role is to proactively regulate the 3 standards which are classified as ‘economic’. These are

the Governance and Financial Viability Standard

the Value for Money Standard

the Rent Standard

We can issue a code of practice which relates to any matter addressed by an economic standard and amplifies an economic standard. We have issued one code of practice which amplifies the Governance and Financial Viability Standard.

The remaining 4 standards are classified as ‘consumer’. These are

the Tenant Involvement and Empowerment Standard

the Home Standard

the Tenancy Standard

the Neighbourhood and Community Standard

For the consumer standards our role is reactive in response to referrals or other information received. Our role is limited to intervening where failure to meet the standards has caused or could have caused serious harm to tenants.

Our approach to regulation

We take a co-regulatory approach. This means boards and councillors who govern providers’ service delivery are responsible for ensuring their organisation is meeting our standards, and for being open and accountable in how their organisation meets its objectives. Co-regulation also requires providers to support tenants in the shaping and scrutinising of service delivery and in holding boards and councillors to account.

We are risk-based in our regulatory approach. We use our sector risk analysis and assessments of registered providers with 1,000 or more social housing units to identify those we judge to be more complex and who consequently have an increased level of risk exposures. Providers with fewer than 1,000 social housing units are subject to a lower level of regulatory engagement. Our sector risk profile is published annually and it can help registered providers to manage risks effectively.

We must obtain sufficient assurance that the economic standards are being met by providers particularly the Governance and Financial Viability Standard. We maintain regulatory judgements on performance against governance and financial viability. To ensure that the system of judgements is transparent a gradings under review system identifies providers who are in danger of having their regulatory judgement downgraded to a non-compliant grade.

Further guidance on how we operate can be found in Regulating the Standards which sets out what action we take to ensure the regulatory standards are being met.

Where we make a particularly important decision in relation to our approach to regulation, we record it as a decision instrument. The views of registered providers in relation to our regulatory framework and approach are captured through our stakeholder survey and consultations.

Intervention and enforcement

We expect providers to identify problems and take effective action to resolve them. If a provider takes responsibility and we conclude that it is able to respond to the problems, we will work with the provider to help it deliver the necessary corrective actions.

However, there may be circumstances where a provider is unable or unwilling to respond positively. Under these circumstances we may use our regulatory enforcement and general powers. Details of our powers and our approach to intervention and enforcement can be found in Guidance on approach to intervention, enforcement and powers.